In the News

Share buttons
Tenneco Inc. (ticker: TEN, exchange: New York Stock Exchange)

Tenneco Reports Third Quarter 2021 Results

November 5, 2021
Click here to download a copy of Tenneco's Q3 2021 Earnings Release and Attachments

LAKE FOREST, Ill., Nov. 5, 2021 /PRNewswire/ -- Tenneco (NYSE: TEN) today announced results for the third quarter ended September 30, 2021, including the following:

  • Tenneco posted higher third quarter total revenue of $4.3 billion, up 2% versus prior year. Value-add revenue for the third quarter 2021 was $3.3 billion, 2% lower year-over-year excluding favorable currency impact of $53 million. Tenneco's revenue performance in the quarter strongly outpaced industry light vehicle production, which declined 20% versus last year, driven by our diversified end market mix.
  • The Company reported net earnings for the third quarter 2021 of $15 million, or $0.17 per diluted share, compared with a net loss in prior year of $499 million, or $(6.12) per diluted share.
  • Third quarter EBIT* was $125 million versus $236 million in the prior year, and EBIT as a percent of revenue decreased 260 basis points to 2.9% versus 5.5% in the prior year.
  • Adjusted EBITDA** was $279 million, versus $388 million a year ago. Adjusted EBITDA as a percent of value-add revenue was 8.5%, versus 11.8% last year. The year-over-year margin decline was attributable to temporary cost actions in 2020 that were not repeated this year and net material cost inflation due to timing of recoveries. Volume related inefficiencies caused by the continued semiconductor shortage were more than offset by Accelerate+ structural cost improvements.
  • Third quarter operating cash flow was a use of $48 million, primarily due to higher inventory levels resulting from volatile production schedules, and year to date free cash flow for debt service was roughly neutral. Higher LTM earnings resulted in a 1.1x improvement in the Company's net leverage ratio*** compared to December 31, 2020.

"Our third quarter results demonstrate the scale and diversification in our regions and markets served and our ability to actively manage costs. Actions taken during the quarter helped mitigate the effects of the volatile light vehicle production environment driven by the semiconductor shortage along with inflationary pressures and other pandemic-related challenges," said Brian Kesseler, Tenneco's chief executive officer. "We appreciate the ongoing efforts of our global team members who remain focused on business-critical priorities during these extraordinary times."

Outlook 
For 2021, Tenneco has updated its full year guidance ranges.

FY2021 Current Outlook

          

FY2021 Prior  Outlook

Revenue

$17.75 – 17.85B


Revenue

$18.3 – 18.6B

Value-Add Revenue

$13.55 – 13.65B


Value-Add Revenue

$13.8 – 14.1B

Adjusted EBITDA**

$1.25 – 1.28B


Adjusted EBITDA**

$1.36 – 1.44B

Net Debt (1)

~$4.3B


Net Debt (1)

<$4.2B

(1) Total debt net of total cash balances

"Building upon our Accelerate+ structural cost savings program, we are initiating additional cost reduction actions to better flex our capacity to align with the current market conditions, which we expect will carry into 2022," added Kesseler. "Tenneco's mid and long-term prospects remain strong as we continue our disciplined focus on cost reduction, cash generation and investment in our strategic growth drivers. We are well positioned to benefit from the eventual recovery of light vehicle production volumes."

* EBIT: Earnings before interest expense, income taxes and noncontrolling interests.

** Adjusted EBITDA: Adjusted earnings before interest expense, income taxes, noncontrolling interests, and depreciation and amortization.

*** Net leverage ratio: Ratio of debt net of total cash balances to adjusted LTM EBITDA including noncontrolling interests.

Earnings Conference Call Details
The Company will host a webcast conference call on Friday, November 5, 2021 at 9:30 a.m. ET.  The purpose of the call is to discuss the Company's financial results for the third quarter 2021, as well as to provide other information regarding the company's outlook.

A live "listen only" webcast and presentation materials will be available on the investor section of the company's website at https://investors.tenneco.com.  An archive of the webcast will be available approximately one hour after conclusion of the call for one year. 

Telephone participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10161052/ee7271b14c

Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator.  Participants may pre-register at any time, including up to and after the call start time. 

Those without internet access or unable to pre-register may dial in, using the passcode "Tenneco Inc."
PARTICIPANT DIAL IN (TOLL FREE): 1-833-366-1121
PARTICIPANT INTERNATIONAL DIAL IN: 1-412-902-6733

Attachment 1
Statements of Income (Loss) – 3 months
Statements of Income (Loss) – 9 months
Balance Sheets
Statements of Cash Flows – 3 Months
Statements of Cash Flows – 9 Months

Attachment 2
Reconciliation of GAAP to Non-GAAP Earnings Measures – 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 9 Months
Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and Earnings Measures – 3 and 9 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3 and 9 Months
Reconciliation of Non-GAAP Measures – Debt Net of Total Cash/Adjusted LTM EBITDA including noncontrolling interests
Reconciliation of GAAP to Non-GAAP Revenue Measures – Original Equipment, Original Equipment Service and Aftermarket Revenue – 3 and 9 Months

About Tenneco
Tenneco is one of the world's leading designers, manufacturers, and marketers of automotive products for original equipment and aftermarket customers, with full year 2020 revenues of $15.4 billion and approximately 73,000 team members working at more than 270 sites worldwide.  Through our four business groups, Motorparts, Performance Solutions, Clean Air and Powertrain, Tenneco is driving advancements in global mobility by delivering technology solutions for diversified global markets, including light vehicle, commercial truck, off-highway, industrial, motorsport and the aftermarket.

Visit www.tenneco.com to learn more.

Investors and others should note that Tenneco routinely posts important information on its website and considers the Investor section, www.investors.tenneco.com, a channel of distribution. 

About Guidance
Revenue estimates and other forecasted information in this release are based on OE manufacturers' programs that have been formally awarded to the company; programs where Tenneco is highly confident that it will be awarded business based on informal customer indications consistent with past practices; and Tenneco's status as supplier for the existing program and its relationship with the customer.  This information is also based on anticipated vehicle production levels and pricing, including precious metals pricing and the impact of material cost changes. Unless otherwise indicated, our methodology does not attempt to forecast currency fluctuations, and accordingly, reflects constant currency. Certain elements of the restructuring and related expenses, legal settlements, substrate pricing, and other unusual charges we incur from time to time cannot be forecasted accurately.  In this respect, we are not able to forecast corresponding GAAP measures without unreasonable efforts on account of these factors and other factors not in our control.

Safe Harbor
This press release contains forward-looking statements. The words "will," "would," "could," "expect," "anticipate," and similar expressions (and variations thereof), identify these forward-looking statements. These forward-looking statements are based on the current expectations of the Company (including its subsidiaries).  Because these statements involve risks and uncertainties, actual results may differ materially from the expectations expressed in the forward-looking statements.

Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include: general economic, business, market and social conditions, including the effects of the COVID-19 pandemic and the impact of inflationary pressures on materials, labor and other costs of doing business; our ability (or inability) to successfully execute cost reduction, performance improvement and other plans, including our plans in response to the COVID-19 pandemic and our previously announced accelerated performance improvement plan ("Accelerate"), and to realize the anticipated benefits from these plans; disasters, local and global public health emergencies or other catastrophic events, where we or our customers do business, and any resultant disruptions; supply chain disruptions, including constraints on steel and semiconductors and resulting increases in costs, impacting our company, our customers or the automotive industry; changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases), the amount of our debt, our ability to access capital markets at favorable rates, and the credit ratings of our debt and our financial flexibility to respond to COVID-19 pandemic; our ability to comply with the covenants contained in the agreements governing our indebtedness and otherwise have sufficient liquidity through the COVID-19 pandemic; our working capital requirements; our ability to source and procure needed materials, components and other products, and services (including the services of employees) in accordance with customer demand and at competitive prices; the cost and outcome of existing and any future claims, legal proceedings or investigations; changes in consumer demand for our OE products or aftermarket products, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences; the continued evolution of the automotive industry towards car and ride sharing and autonomous vehicles; to the announced plans, in an effort to reduce greenhouse gas emissions, of governments and vehicle manufacturers to limit production of diesel and gasoline powered vehicles in various national and local jurisdictions globally; the cyclical nature of the global vehicle industry, including the performance of the global aftermarket sector and the impact of vehicle parts' longer product lives; changes in automotive and commercial vehicle manufacturers' production rates and their actual and forecasted requirements for our products, due to difficult economic conditions and/or regulatory or legal changes affecting internal combustion engines and/or aftermarket products; our dependence on certain large customers, including the loss of any of our large OE manufacturer customers (on whom we depend for a substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OE-customers or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations; the overall highly competitive nature of the automotive and commercial vehicle parts industries, and any resultant inability to realize the sales represented by our awarded book of business (which is based on anticipated pricing and volumes over the life of the applicable program); risks inherent in operating a multi-national company; damage to the reputation of one or more of our leading brands; industry-wide strikes, labor disruptions at our facilities or any labor or other economic disruptions at any of our significant customers or suppliers or any of our customers' other suppliers, including increased costs associated with strikes or labor or other economic disruptions; changes in distribution channels or competitive conditions in the markets and countries where we operate; customer acceptance of new products; our ability to successfully integrate, and benefit from, any acquisitions that we complete; the potential impairment in the carrying value of our long-lived assets, goodwill, and other intangible assets or the inability to fully realize our deferred tax assets; increases in the costs of raw materials or components, including our ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods; the impact of the extensive, increasing, and changing laws and regulations to which we are subject, including environmental laws and regulations, which may result in our incurrence of environmental liabilities in excess of the amount reserved or increased costs or loss of revenues relating to products subject to changing regulation;  and the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control.

In addition, statements regarding the Company's ongoing review of strategic alternatives, including a potential separation of the Company into a powertrain technology company and an aftermarket and ride performance company, constitute forward-looking statements. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include (in addition to the risks set forth above): the ability to identify and consummate strategic alternatives that yield additional value for shareholders; the timing, benefits and outcome of the Company's strategic review process; the structure, terms and specific risk and uncertainties associated with any potential strategic alternative; potential disruptions in our business and stock price as a result of our exploration, review and pursuit of any strategic alternatives; the possibility that the Company may not complete a separation of the aftermarket and ride performance business from the powertrain technology business (or achieve some or all of the anticipated benefits of such a separation on the timeline contemplated or at all); the ability to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; the potential diversion of management's attention resulting from a separation or other strategic alternative; the risk the combined company and each separate company following a separation will underperform relative to our expectations; the ongoing transaction costs and risk that we may incur greater costs following a separation of the business or other strategic alternative; and the risk a separation is determined to be a taxable transaction. 

The risks included here are not exhaustive.  The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release. Additional information regarding these risk factors and uncertainties is, and will be, detailed from time to time in the Company's SEC filings, including but not limited to its annual report on Form 10-K for the year ended December 31, 2020, and quarterly report on Form 10-Q for the quarter ended March 31, 2021, and June 30, 2021.

Investor inquiries:
Linae Golla
847-482-5162
lgolla@tenneco.com

Rich Kwas
248-849-1340
rich.kwas@tenneco.com

Media inquiries:
Bill Dawson
847-482-5807
bdawson@tenneco.com

 

ATTACHMENT 1


TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Unaudited

(millions, except per share amounts) 



Three Months Ended
September 30,


2021


2020*

Net sales and operating revenues:




Motorparts

$

769



$

730


Performance Solutions

686



679


Clean Air - Value-add revenues

897



958


Clean Air - Substrate sales

1,039



961


Powertrain

941



928


          Total net sales and operating revenues

4,332



4,256


Costs and expenses:




   Cost of sales (exclusive of depreciation and amortization)

3,776



3,610


   Selling, general, and administrative

240



214


   Depreciation and amortization

147



151


   Engineering, research, and development

71



67


   Restructuring charges, net and asset impairments

(4)



17


          Total costs and expenses

4,230



4,059


Other income (expense):




Non-service pension and postretirement benefit (costs) credits

4



18


Equity in earnings (losses) of nonconsolidated affiliates, net of tax

10



9


Other income (expense), net

9



12



23



39


Earnings (loss) before interest expense, income taxes, and noncontrolling interests

125



236


Interest expense

(66)



(68)


Earnings (loss) before income taxes and noncontrolling interests

59



168


Income tax (expense) benefit

(34)



(648)


Net income (loss)

25



(480)


Less: Net income (loss) attributable to noncontrolling interests

10



19


Net income (loss) attributable to Tenneco Inc.

$

15



$

(499)






Basic earnings (loss) per share:




Earnings (loss) per share

$

0.17



$

(6.12)


Weighted average shares outstanding

82.3



81.5


Diluted earnings (loss) per share:




Earnings (loss) per share

$

0.17



$

(6.12)


Weighted average shares outstanding

84.1



81.5







* Beginning in the first quarter of 2021, the Company made a change to its operating segments. This change consisted of moving a reporting unit within the Powertrain segment to the Ride Performance segment. In addition, with this change to its segments, Ride Performance was renamed Performance Solutions. As such, prior period operating segment results have been conformed to reflect the Company's current operating segments.         


 

ATTACHMENT 1


TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Unaudited

(millions, except per share amounts) 



Nine Months Ended
September 30,


2021


2020*

Net sales and operating revenues:




Motorparts

$

2,282



$

1,995


Performance Solutions

2,188



1,726


Clean Air - Value-add revenues

2,876



2,320


Clean Air - Substrate sales

3,208



2,284


Powertrain

3,092



2,404


          Total net sales and operating revenues

13,646



10,729


Costs and expenses:




Cost of sales (exclusive of depreciation and amortization)

11,810



9,447


Selling, general, and administrative

764



658


Depreciation and amortization

447



481


Engineering, research, and development

216



199


Restructuring charges, net and asset impairments

48



622


Goodwill and intangible impairment charges



383


          Total costs and expenses

13,285



11,790


Other income (expense):




Non-service pension and postretirement benefit (costs) credits

10



20


Equity in earnings (losses) of nonconsolidated affiliates, net of tax

47



26


Gain (loss) on extinguishment of debt

8




Other income (expense), net

30



31



95



77


Earnings (loss) before interest expense, income taxes, and noncontrolling interests

456



(984)


Interest expense

(205)



(209)


Earnings (loss) before income taxes and noncontrolling interests

251



(1,193)


Income tax (expense) benefit

(122)



(453)


Net income (loss)

129



(1,646)


Less: Net income (loss) attributable to noncontrolling interests

59



42


Net income (loss) attributable to Tenneco Inc.

$

70



$

(1,688)






Basic earnings (loss) per share:




Earnings (loss) per share

$

0.85



$

(20.75)


Weighted average shares outstanding

82.2



81.3


Diluted earnings (loss) per share:




Earnings (loss) per share

$

0.83



$

(20.75)


Weighted average shares outstanding

83.5



81.3







* Beginning in the first quarter of 2021, the Company made a change to its operating segments. This change consisted of moving a reporting unit within the Powertrain segment to the Ride Performance segment. In addition, with this change to its segments, Ride Performance was renamed Performance Solutions. As such, prior period operating segment results have been conformed to reflect the Company's current operating segments.         

 

ATTACHMENT 1


TENNECO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(dollars in millions)



September 30, 2021


December 31, 2020


Assets





Cash and cash equivalents

$

589



$

798



Restricted cash

6



5



Receivables, net

2,585


(a)

2,528


(a)

Inventories

1,893



1,743



Prepayments and other current assets

744



619



Property, plant, and equipment, net

2,885



3,057



Other noncurrent assets

2,914



3,102



Total assets

$

11,616



$

11,852



Liabilities and Shareholders' Equity





Short-term debt, including current maturities of long-term debt

$

78



$

162



Accounts payable

2,877



2,917



Accrued compensation and employee benefits

408



365



Accrued income taxes

65



54



Accrued expenses and other current liabilities

1,188



1,188



Long-term debt

5,050


(b)

5,171


(b)

Deferred income taxes

92



89



Pension and postretirement benefits

1,028



1,101



Deferred credits and other liabilities

496



546



Redeemable noncontrolling interests

111



78



Total Tenneco Inc. shareholders' equity (deficit)

(90)



(119)



Noncontrolling interests

313



300



Total liabilities, redeemable noncontrolling interests, and equity

$

11,616



$

11,852





September 30, 2021


December 31, 2020


(a) Accounts receivable net of:





Accounts receivable outstanding and derecognized

$

981



$

956








(b) Long-term debt composed of:





Revolver Borrowings

$



$



LIBOR plus 1.75% Term Loan A due 2019 through 2023(1)

1,428



1,520



LIBOR plus 3.00% Term Loan B due 2019 through 2025

1,607



1,612



$225 million of 5.375% Senior Notes due 2024

223



223



$500 million of 5.000% Senior Notes due 2026

495



494



€300 million of Euribor plus 4.875% Euro Floating Rate Notes due 2024(2)



370



€350 million of 5.000% Euro Fixed Rate Notes due 2024(2)



445



$500 million of 7.875% Senior Secured Notes due 2029

490



489



$800 million of 5.125% Senior Secured Notes due 2029(3)

787





Other debt, primarily foreign instruments

25



23




5,055



5,176



Less: maturities classified as current

5



5



Total long-term debt

$

5,050



$

5,171










(1)

The interest rate on Term Loan A at December 31, 2020 was LIBOR plus 2.50%.

(2)

The Company satisfied and discharged all of its 4.875% Euro Floating Rate Notes due 2024 and 5.000% Euro Fixed Rate Notes due 2024 on March 17, 2021.

(3)

On March 17, 2021, the Company issued $800 million aggregate principal amount of 5.125% senior secured notes due April 15, 2029.


 

ATTACHMENT 1


TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(dollars in millions)


Three Months Ended
September 30,


2021


2020

Operating Activities




Net income (loss)

$

25



$

(480)


Adjustments to reconcile net income (loss) to cash (used) provided by operating activities:




Depreciation and amortization

147



151


Deferred income taxes

(4)



544


Stock-based compensation

9



4


Restructuring charges and asset impairments, net of cash paid

(20)



(11)


Change in pension and other postretirement benefit plans

(11)



(23)


Equity in earnings of nonconsolidated affiliates

(10)



(9)


Loss (gain) on sale of assets and other

15



2


Changes in operating assets and liabilities:




Receivables

30



(603)


Inventories

(1)



11


Payables and accrued expenses

(238)



782


Accrued interest and accrued income taxes

(10)



40


Other assets and liabilities

20



78


Net cash (used) provided by operating activities

(48)



486


Investing Activities




Proceeds from sale of assets

27



3


Net proceeds from sale of business



3


Proceeds from sale of investment in nonconsolidated affiliates

3




Cash payments for property, plant, and equipment

(101)



(96)


Proceeds from deferred purchase price of factored receivables

102



85


Other



2


Net cash (used) provided by investing activities

31



(3)


Financing Activities




Proceeds from term loans and notes

(2)



47


Repayments of term loans and notes

(72)



(63)


Debt issuance costs of long-term debt

(1)




Borrowings on revolving lines of credit

1,896



31


Payments on revolving lines of credit

(1,903)



(1,111)


Net increase (decrease) in bank overdrafts



(50)


Distributions to noncontrolling interest partners

(4)



(16)


Other

(5)



11


Net cash (used) provided by financing activities

(91)



(1,151)


Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

(16)



18


Increase (decrease) in cash, cash equivalents, and restricted cash

(124)



(650)


Cash, cash equivalents, and restricted cash, beginning of period

719



1,371


Cash, cash equivalents, and restricted cash, end of period

$

595



$

721


Supplemental Cash Flow Information




Cash paid during the period for interest

$

62



$

65


Cash paid during the period for income taxes, net of refunds

$

42



$

39


Lease assets obtained in exchange for new operating lease liabilities

$

9



$

7


Non-cash inventory charge due to aftermarket product line exit

$



$

(9)


Non-cash Investing Activities




Period end balance of accounts payable for property, plant, and equipment

$

73



$

79


Deferred purchase price of receivables factored in the period

$

102



$

102


 

ATTACHMENT 1


TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(dollars in millions)



Nine Months Ended
September 30,


2021


2020

Operating Activities




Net income (loss)

$

129



$

(1,646)


Adjustments to reconcile net income (loss) to cash (used) provided by operating activities:




Goodwill and intangible impairment charges



383


Depreciation and amortization

447



481


Deferred income taxes

8



302


Stock-based compensation

18



13


Restructuring charges and asset impairments, net of cash paid

(17)



529


Change in pension and other postretirement benefit plans

(22)



(49)


Equity in earnings of nonconsolidated affiliates

(47)



(26)


Cash dividends received from nonconsolidated affiliates

58



18


Loss (gain) on sale of assets and other

8



1


Changes in operating assets and liabilities:




Receivables

(451)



(429)


Inventories

(194)



303


Payables and accrued expenses

11



242


Accrued interest and accrued income taxes

24



23


Other assets and liabilities

3



10


Net cash (used) provided by operating activities

(25)



155


Investing Activities




Proceeds from sale of assets

39



8


Net proceeds from sale of business

1



3


Proceeds from sale of investment in nonconsolidated affiliates

6




Cash payments for property, plant, and equipment

(286)



(308)


Proceeds from deferred purchase price of factored receivables

356



176


Other



3


Net cash (used) provided by investing activities

116



(118)


Financing Activities




Proceeds from term loans and notes

836



143


Repayments and extinguishment costs of term loans and notes

(1,011)



(196)


Debt issuance costs of long-term debt

(13)



(16)


Borrowings on revolving lines of credit

4,772



4,852


Payments on revolving lines of credit

(4,774)



(4,647)


Issuance (repurchase) of common shares

(2)



(1)


Net increase (decrease) in bank overdrafts



9


Distributions to noncontrolling interest partners

(12)



(18)


Collections (payments) on securitization programs, net and other

(76)



10


Net cash (used) provided by financing activities

(280)



136


Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

(19)



(18)


Increase (decrease) in cash, cash equivalents, and restricted cash

(208)



155


Cash, cash equivalents, and restricted cash, beginning of period

803



566


Cash, cash equivalents, and restricted cash, end of period

$

595



$

721


Supplemental Cash Flow Information




Cash paid during the period for interest

$

162



$

188


Cash paid during the period for income taxes, net of refunds

$

104



$

114


Lease assets obtained in exchange for new operating lease liabilities

$

35



$

61


Non-cash inventory charge due to aftermarket product line exit

$

44



$

73


Non-cash Investing Activities




Period end balance of accounts payable for property, plant, and equipment

$

73



$

79


Deferred purchase price of receivables factored in the period

$

368



$

197


Reduction in assets from redeemable noncontrolling interest transaction with owner

$



$

53


 

ATTACHMENT 2


TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)

Unaudited

(millions, except per share amounts)



Q3 2021


Q3 2020


Net
income
(loss)
attributable to
Tenneco
Inc.


Per
Share


Net income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)

Earnings (Loss) Measures

$

15



$

0.17



$

10



$

(34)



$

125



$

272



$

(499)



$

(6.12)



$

19



$

(648)



$

236



$

387


Adjustments:
























Restructuring and related expenses (5)













23



0.28





(2)



25



24


Anti-dumping duty charge (6)

3



0.03







3



3














Asset impairments (7)

1



0.01







1



1



3



0.04







3



3


Other costs (including strategic and transaction related) (8)

2



0.03







2



2



4



0.06







4



4


Loss on sale of unconsolidated JV affiliate

1



0.01







1



1














Inventory write-down (9)













(9)



(0.12)







(9)



(9)


OPEB curtailment (10)













(21)



(0.26)







(21)



(21)


Net tax adjustments (11)

(7)



(0.08)





(7)







526



6.45





526






Adjusted Net income, EPS, NCI, Tax, EBIT, and EBITDA (4)

$

15



$

0.17



$

10



$

(41)



$

132



$

279



$

27



$

0.33



$

19



$

(124)



$

238



$

388


       


Q3 2021


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$

15


Net income (loss) attributable to noncontrolling interests













10


Net income (loss)













25


Income tax (expense) benefit













(34)


Interest expense













(66)


EBIT, Earnings (Loss) before interest expense,
income taxes and noncontrolling interests













125


Depreciation and amortization













147


Total EBITDA including noncontrolling interests (3)

$

111



$

42



$

138



$

71



$

362



$

(90)



$

272


Restructuring and related expenses (5)



(5)



(1)



3



(3)



3




Anti-dumping duty charge (6)

3









3





3


Asset impairments (7)

1









1





1


Loss on sale of unconsolidated JV affiliate



1







1





1


Other costs (including strategic and transaction related) (8)











2



2


Adjusted EBITDA (4)

$

115



$

38



$

137



$

74



$

364



$

(85)



$

279




Q3 2020*


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$

(499)


Net income (loss) attributable to noncontrolling interests













19


Net income (loss)













(480)


Income tax (expense) benefit













(648)


Interest expense













(68)


EBIT, Earnings (Loss) before interest expense,
income taxes and noncontrolling interests













236


Depreciation and amortization













151


Total EBITDA including noncontrolling interests (3)

$

138



$

46



$

149



$

88



$

421



$

(34)



$

387


Restructuring and related expenses (5)

(1)



11



1



13



24





24


Asset impairments (7)

3









3





3


Other costs (including strategic and transaction related) (8)



(2)



(1)





(3)



7



4


Inventory write-down (9)

(9)









(9)





(9)


OPEB curtailment (10)











(21)



(21)


Adjusted EBITDA (4)

$

131



$

55



$

149



$

101



$

436



$

(48)



$

388







* Beginning in the first quarter of 2021, the Company made a change to its operating segments. This change consisted of moving a reporting unit within the Powertrain segment to the Ride Performance segment. In addition, with this change to its segments, Ride Performance was renamed Performance Solutions. As such, prior period operating segment results have been conformed to reflect the Company's current operating segments.         


(1) U.S. Generally Accepted Accounting Principles.


(2) Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results in a manner that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between the periods. Adjustments similar to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the non-GAAP earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.


(3) EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization.  EBITDA including noncontrolling interests is not a calculation based upon GAAP.  The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data.  In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity.  Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance.  In addition, Tenneco believes its investors utilize and analyze the company's EBITDA including noncontrolling interests for similar purposes.  Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors.  However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.


(4) Adjusted results are presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long term benefit of the company and other items impacting comparability between periods.  Similar adjustments have been recorded in earlier periods and similar types of adjustments can reasonably be expected to be recorded in future periods.  The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.


(5) Q3 2020 includes $1 million of depreciation related to restructuring and related expenses.


(6) Anti-dumping duty charges.


(7) Asset impairment charges.


(8) Amounts in Q3 2020 included costs related to acquisitions and expected separation.


(9) Non-cash charge to write-down inventory to its net realizable value.


(10) OPEB curtailment as a result of an amended union agreement that eliminates healthcare benefits for future retirees.


(11) Q3 2020 includes non-cash tax valuation allowance charge of $523 million.


 

 ATTACHMENT 2


TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)

Unaudited

(in millions, except per share amounts)



Q3 2021 YTD


Q3 2020 YTD


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)

Earnings (Loss) Measures

$

70



$

0.83



$

59



$

(122)



$

456



$

903



$

(1,688)



$

(20.75)



$

42



$

(453)



$

(984)



$

(503)


Adjustments:
























Restructuring and related expenses (5)

57



0.68





(5)



62



59



136



1.66





(35)



171



163


Anti-dumping duty charge (6)

3



0.03







3



3














Inventory write-down (7)

44



0.53







44



44



54



0.66





(19)



73



73


Asset impairments (8)

5



0.05





1



4



4



396



4.87



7



(100)



503



503


Other costs (including strategic and transaction related) (9)

15



0.18







15



15



29



0.37





(8)



37



37


OPEB curtailment (10)













(21)



(0.26)







(21)



(21)


Goodwill and intangible impairment charges (11)













366



4.51



5



(12)



383



383


Loss on sale of unconsolidated JV affiliate

2



0.03







2



2














Loss on sale of business



0.01





(1)



1



1














Gain on debt extinguishment

(8)



(0.10)







(8)



(8)














Noncontrolling interests adjustments (12)













11



0.14



(11)








Net tax adjustments (13)

(14)



(0.16)





(14)







543



6.67





543






Adjusted Net income, EPS, NCI, Tax, EBIT, and EBITDA (4)

$

174



$

2.08



$

59



$

(141)



$

579



$

1,023



$

(174)



$

(2.13)



$

43



$

(84)



$

162



$

635


 


Q3 2021 YTD


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$

70


Net income (loss) attributable to noncontrolling interests













59


Net income (loss)













129


Income tax (expense) benefit













(122)


Interest expense













(205)


EBIT, Earnings (Loss) before interest expense,
income taxes and noncontrolling interests













456


Depreciation and amortization













447


Total EBITDA including noncontrolling interests (3)

$

280



$

117



$

430



$

280



$

1,107



$

(204)



$

903


Restructuring and related expenses (5)

8



8



10



22



48



11



59


Anti-dumping duty charge (6)

3









3





3


Inventory write-down (7)

44









44





44


Loss on sale of business

1









1





1


Asset impairments (8)

2









2



2



4


Loss on sale of unconsolidated JV affiliate



2







2





2


Other costs (including strategic and transaction related) (9)











15



15


Gain on debt extinguishment











(8)



(8)


Adjusted EBITDA (4)

$

338



$

127



$

440



$

302



$

1,207



$

(184)



$

1,023




Q3 2020 YTD*


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$

(1,688)


Net income (loss) attributable to noncontrolling interests













42


Net income (loss)













(1,646)


Income tax (expense) benefit













(453)


Interest expense













(209)


EBIT, Earnings (Loss) before interest expense,
income taxes and noncontrolling interests













(984)


Depreciation and amortization













481


Total EBITDA including noncontrolling interests (3)

$

46



$

(691)



$

265



$

46



$

(334)



$

(169)



$

(503)


Restructuring and related expenses (5)

19



65



23



50



157



6



163


Inventory write-down (7)

73









73





73


Asset impairments (8)

27



455





4



486



17



503


Other costs (including strategic and transaction related) (9)



(2)



3





1



36



37


OPEB curtailment (10)











(21)



(21)


Goodwill and intangible impairment charges (11)

110



232





41



383





383


Adjusted EBITDA (4)

$

275



$

59



$

291



$

141



$

766



$

(131)



$

635







* Beginning in the first quarter of 2021, the Company made a change to its operating segments. This change consisted of moving a reporting unit within the Powertrain segment to the Ride Performance segment. In addition, with this change to its segments, Ride Performance was renamed Performance Solutions. As such, prior period operating segment results have been conformed to reflect the Company's current operating segments.         


(1) U.S. Generally Accepted Accounting Principles.


(2) Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results in a manner that allows a better understanding of the results of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between the periods. Adjustments similar to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the non-GAAP earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the nature and classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.


(3) EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization.  EBITDA including noncontrolling interests is not a calculation based upon GAAP.  The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data.  In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity.  Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance.  In addition, Tenneco believes its investors utilize and analyze the company's EBITDA including noncontrolling interests for similar purposes.  Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors.  However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.


(4) Adjusted results are presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long term benefit of the company and other items impacting comparability between periods.  Similar adjustments have been recorded in earlier periods and similar types of adjustments can reasonably be expected to be recorded in future periods.  The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.


(5) Q3 YTD 2021 and Q3 YTD 2020 includes $3 million and  $7 million of accelerated depreciation related to plant closures, respectively. Q3 YTD 2020 also includes $1 million depreciation related to restructuring and related expenses.


(6) Anti-dumping duty charges.


(7) Non-cash charge to write-down inventory in the Motorparts segment in connection with its initiative to rationalize its supply chain and distribution network.


(8) Asset impairment charges.


(9) Amounts in Q3 YTD 2020 included costs related to acquisitions and expected separation.


(10) OPEB curtailment as a result of an amended union agreement that eliminates healthcare benefits for future retirees.


(11) Non-cash asset impairment charge related to goodwill and intangibles.


(12) Amount in Q3 YTD 2020 relates to adjustments made to mark certain redeemable noncontrolling interests to their redemption values.                                                                


(13) Q3 YTD 2020 includes non-cash tax valuation allowance charge of $523 million.                                                                                         

 

ATTACHMENT 2


TENNECO INC.

RECONCILIATION OF GAAP(1) REVENUE AND EARNINGS TO NON-GAAP REVENUE AND EARNINGS MEASURES(2)

Unaudited

(in millions, except percents)



Q3 2021


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$

769



$

686



$

1,936



$

941



$

4,332



$



$

4,332


Less: Substrate sales





1,039





1,039





1,039


Value-add revenues

$

769



$

686



$

897



$

941



$

3,293



$



$

3,293
















EBITDA

$

111



$

42



$

138



$

71



$

362



$

(90)



$

272


EBITDA as a % of revenue

14.4%



6.1%



7.1%



7.5%



8.4%





6.3%


EBITDA as a % of value-add revenue

14.4%



6.1%



15.4%



7.5%



11.0%





8.3%
















Adjusted EBITDA

$

115



$

38



$

137



$

74



$

364



$

(85)



$

279


Adjusted EBITDA as a % of revenue

15.0%



5.5%



7.1%



7.9%



8.4%





6.4%


Adjusted EBITDA as a % of value-add revenue

15.0%



5.5%



15.3%



7.9%



11.1%





8.5%




Q3 2020


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$

730



$

679



$

1,919



$

928



$

4,256



$



$

4,256


Less: Substrate sales





961





961





961


Value-add revenues

$

730



$

679



$

958



$

928



$

3,295



$



$

3,295
















EBITDA

$

138



$

46



$

149



$

88



$

421



$

(34)



$

387


EBITDA as a % of revenue

18.9%



6.8%



7.8%



9.5%



9.9%





9.1%


EBITDA as a % of value-add revenue

18.9%



6.8%



15.6%



9.5%



12.8%





11.7%
















Adjusted EBITDA

$

131



$

55



$

149



$

101



$

436



$

(48)



$

388


Adjusted EBITDA as a % of revenue

17.9%



8.1%



7.8%



10.9%



10.2%





9.1%


Adjusted EBITDA as a % of value-add revenue

17.9%



8.1%



15.6%



10.9%



13.2%





11.8%




Q3 2021 YTD


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$

2,282



$

2,188



$

6,084



$

3,092



$

13,646



$



$

13,646


Less: Substrate sales





3,208





3,208





3,208


Value-add revenues

$

2,282



$

2,188



$

2,876



$

3,092



$

10,438



$



$

10,438
















EBITDA

$

280



$

117



$

430



$

280



$

1,107



$

(204)



$

903


EBITDA as a % of revenue

12.3%



5.3%



7.1%



9.1%



8.1%





6.6%


EBITDA as a % of value-add revenue

12.3%



5.3%



15.0%



9.1%



10.6%





8.7%
















Adjusted EBITDA

$

338



$

127



$

440



$

302



$

1,207



$

(184)



$

1,023


Adjusted EBITDA as a % of revenue

14.8%



5.8%



7.2%



9.8%



8.8%





7.5%


Adjusted EBITDA as a % of value-add revenue

14.8%



5.8%



15.3%



9.8%



11.6%





9.8%































Q3 2020 YTD


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$

1,995



$

1,726



$

4,604



$

2,404



$

10,729



$



$

10,729


Less: Substrate sales





2,284





2,284





2,284


Value-add revenues

$

1,995



$

1,726



$

2,320



$

2,404



$

8,445



$



$

8,445
















EBITDA

$

46



$

(691)



$

265



$

46



$

(334)



$

(169)



$

(503)


EBITDA as a % of revenue

2.3%



(40.0)%



5.8%



1.9%



(3.1)%





(4.7)%


EBITDA as a % of value-add revenue

2.3%



(40.0)%



11.4%



1.9%



(4.0)%





(6.0)%
















Adjusted EBITDA

$

275



$

59



$

291



$

141



$

766



$

(131)



$

635


Adjusted EBITDA as a % of revenue

13.8%



3.4%



6.3%



5.9%



7.1%





5.9%


Adjusted EBITDA as a % of value-add revenue

13.8%



3.4%



12.5%



5.9%



9.1%





7.5%







(1) U.S. Generally Accepted Accounting Principles.                                                                        


(2) Tenneco presents the above reconciliation of revenues in order to reflect EBITDA and adjusted EBITDA as a percent of both total revenues and value-add revenues.  Substrate sales include precious metals pricing, which may be volatile.  Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue.  Excluding substrate sales removes this impact.  Further, presenting EBITDA and adjusted EBITDA as a percent of value-add revenue assists investors in evaluating the company's operational performance without the impact of such substrate sales.  See prior pages for a discussion of EBITDA and adjusted EBITDA.                           

 

ATTACHMENT 2


TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP REVENUE MEASURES(2)

Unaudited

(in millions, except percents)



Q3 2020 Value-
add Revenues


Currency


Volume, Mix
and Other


Q3 2021 Value-
add Revenues


% Change
increase
(decrease)
excluding
currency

Motorparts

$

730



$

8



$

31



$

769



4.2

%

Performance Solutions

679



14



(7)



686



(1.0)

%

Clean Air

958



16



(77)



897



(8.0)

%

Powertrain

928



15



(2)



941



(0.2)

%

Total Tenneco Inc.

$

3,295



$

53



$

(55)



$

3,293



(1.7)

%



Q3 2020 YTD
Value-add
Revenues


Currency


Volume, Mix
and Other


Q3 2021 YTD
Value-add
Revenues


% Change
increase
(decrease)
excluding
currency

Motorparts

$

1,995



$

36



$

251



$

2,282



12.6

%

Performance Solutions

1,726



73



389



2,188



22.5

%

Clean Air

2,320



74



482



2,876



20.8

%

Powertrain

2,404



91



597



3,092



24.8

%

Total Tenneco Inc.

$

8,445



$

274



$

1,719



$

10,438



20.4

%






(1) U.S. Generally Accepted Accounting Principles.


(2) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from the effects of doing business in currencies other than the U.S. dollar.  Additionally, substrate sales include precious metals pricing, which may be volatile.  Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue.  Excluding substrate sales removes this impact.  Tenneco uses this information to analyze the trend in revenues before these factors.  Tenneco believes investors find this information useful in understanding period to period comparisons in the company's revenues.

 

ATTACHMENT 2


TENNECO INC.

RECONCILIATION OF NON-GAAP MEASURES

Debt net of total cash / Adjusted LTM EBITDA including noncontrolling interests

Unaudited

(in millions, except ratios)



September 30,
2021


September 30,
2020

Total debt

$

5,128



$

5,772


Total cash, cash equivalents and restricted cash (total cash)

595



721


Debt net of total cash balances (1)

$

4,533



$

5,051


Adjusted LTM EBITDA including noncontrolling interests (2) (3)

$

1,433



$

922


Net leverage ratio (4)

3.2x



5.5x





Q4 2020


Q1 2021


Q2 2021


Q3 2021


Q3 2021 LTM

Net income (loss) attributable to Tenneco Inc.

$

167



$

65



$

(10)



$

15



$

237


Net income (loss) attributable to noncontrolling interests

19



22



27



10



78


Net income (loss)

186



87



17



25



315


Income tax (expense) benefit

(6)



(47)



(41)



(34)



(128)


Interest expense

(68)



(70)



(69)



(66)



(273)


EBIT, Earnings (Loss) before interest expense,
income taxes and noncontrolling interests

260



204



127



125



716


Depreciation and amortization

158



155



145



147



605


Total EBITDA including noncontrolling interests (2)

$

418



$

359



$

272



$

272



$

1,321












Adjustments:










Restructuring and related expenses

6



28



31





65


Anti-dumping duty charge (5)







3



3


Inventory write-down (6)





44





44


Other costs (including strategic and transaction related) (7)

1



8



5



2



16


Asset impairments (8)





3



1



4


Loss on sale of unconsolidated JV affiliate





1



1



2


Antitrust reserve change in estimate (9)

(11)









(11)


(Gain)/Loss on sale of assets or business

(2)



1







(1)


Gain on extinguishment of debt

(2)



(8)







(10)


Total Adjusted EBITDA including noncontrolling interests (3)

$

410



$

388



$

356



$

279



$

1,433





Q4 2019


Q1 2020


Q2 2020


Q3 2020


Q3 2020 LTM

Net income (loss) attributable to Tenneco Inc.

$

(313)



$

(839)



$

(350)



$

(499)



$

(2,001)


Net income (loss) attributable to noncontrolling interests

75



13



10



19



117


Net income (loss)

(238)



(826)



(340)



(480)



(1,884)


Income tax (expense) benefit

(14)



94



101



(648)



(467)


Interest expense

(80)



(75)



(66)



(68)



(289)


EBIT, Earnings (Loss) before interest expense,
income taxes and noncontrolling interests

(144)



(845)



(375)



236



(1,128)


Depreciation and amortization

170



171



159



151



651


Total EBITDA including noncontrolling interests (2)

$

26



$

(674)



$

(216)



$

387



$

(477)












Adjustments:










Restructuring and related expenses

36



34



105



24



199


Inventory write-down (6)





82



(9)



73


Other costs (including strategic and transaction related) (7)

30



25



8



4



67


Asset impairments (8)



471



29



3



503


OPEB curtailment (10)







(21)



(21)


Goodwill and intangible impairment charges (11)

172



383







555


Cost reduction initiatives (12)

(1)









(1)


Costs to achieve synergies (13)

8









8


Purchase accounting charges (14)

2









2


Process harmonization (15)

16









16


Pension charges/adjustments (16)

(2)









(2)


Total Adjusted EBITDA including noncontrolling interests (3)

$

287



$

239



$

8



$

388



$

922







(1) Tenneco presents debt net of total cash balances because management believes it is a useful measure of Tenneco's credit position and progress toward reducing leverage. The calculation is limited in that the company may not always be able to use cash to repay debt on a dollar-for-dollar basis.


(2) EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA including noncontrolling interests is not a calculation based upon GAAP. The amounts included in the EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling interests should not be considered as an alternative to net income attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze the company's EBITDA including noncontrolling interests for similar purposes. Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors. However, the EBITDA including noncontrolling interests measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.


(3) Adjusted EBITDA including noncontrolling interests is presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long term benefit of the company and other items impacting comparability between the periods. Similar adjustments to EBITDA including noncontrolling interests have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.


(4) Net leverage ratio represents ratio of debt net of total cash balances to adjusted LTM EBITDA including noncontrolling interests. Tenneco presents the above reconciliation of the net leverage ratio to show trends that investors may find useful in understanding the company's ability to service its debt. For purposes of this calculation, Adjusted LTM EBITDA including noncontrolling interests is used as an indicator of the company's performance and debt net of total cash is presented as an indicator of the company's credit position and progress toward reducing the company's financial leverage. This reconciliation is provided as supplemental information and not intended to replace the company's existing covenant ratios or any other financial measures that investors may find useful in describing the company's financial position. See notes (1), (2) and (3) for a description of the limitations of using debt net of total cash, EBITDA including noncontrolling interests and Adjusted EBITDA including noncontrolling interests. See the company's fourth quarter earnings release dated February 24, 2021 for the calculation of net leverage ratio as of December 31, 2020. 


(5) Anti-dumping duty charge.


(6) Non-cash charge to write-down inventory in the Motorparts segment in connection with its initiative to rationalize its supply chain and distribution network.


(7) Amounts in prior periods included costs related to the acquisitions and expected separation.


(8) Asset impairment charges.


(9) Reduction in estimated antitrust accrual.


(10) OPEB curtailment as a result of an amended union agreement that eliminates healthcare benefits for future retirees.


(11) Non-cash asset impairment charge related to goodwill and intangibles.


(12) Costs related to cost reduction initiatives.


(13) Costs to achieve synergies related to the Acquisitions.


(14) This primarily relates to a non-cash charge to cost of sales for the amortization of the inventory fair value step-up recorded as part of the Acquisitions.


(15) Charge due to process harmonization.


(16) Charges related to pension derisking and other adjustments.

 

ATTACHMENT 2


TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP REVENUE MEASURES(2)

Unaudited

(in millions)



Q3 2021


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$

2,439



$

757



$

1,136



$

4,332


Less: Substrate sales

837



160



42



1,039


Value-add revenues

$

1,602



$

597



$

1,094



$

3,293











Q3 2020


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$

2,691



$

522



$

1,043



$

4,256


Less: Substrate sales

835



101



25



961


Value-add revenues

$

1,856



$

421



$

1,018



$

3,295







Q3 2021 YTD


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$

7,945



$

2,319



$

3,382



$

13,646


Less: Substrate sales

2,614



471



123



3,208


Value-add revenues

$

5,331



$

1,848



$

3,259



$

10,438







Q3 2020 YTD


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$

6,384



$

1,461



$

2,884



$

10,729


Less: Substrate sales

1,909



311



64



2,284


Value-add revenues

$

4,475



$

1,150



$

2,820



$

8,445



 

 



Q3 2020
Value-add
Revenues


Currency


Volume,
Mix and
Other


Q3 2021
Value-add
Revenues


% Change
increase
(decrease)
excluding
currency

Original equipment light vehicle revenues

$

1,856



$

42



$

(296)



$

1,602



(15.9)

%

Original equipment commercial truck, off-highway,
industrial and other revenues

421



16



160



597



38.0

%

Aftermarket & original equipment service revenues

1,018



(5)



81



1,094



8.0

%

Total Tenneco Inc.

$

3,295



$

53



$

(55)



$

3,293



(1.7)

%






















Q3 2020
YTD Value-
add
Revenues


Currency


Volume,
Mix and
Other


Q3 2021
YTD Value-
add
Revenues


% Change
increase
(decrease)
excluding
currency

Original equipment light vehicle revenues

$

4,475



$

167



$

689



$

5,331



15.4

%

Original equipment commercial truck, off-highway,

 industrial and other revenues

1,150



99



599



1,848



52.1

%

Aftermarket & original equipment service revenues

2,820



8



431



3,259



15.3

%

Total Tenneco Inc.

$

8,445



$

274



$

1,719



$

10,438



20.4

%






(1) U.S. Generally Accepted Accounting Principles.                         


(2) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from the effects of doing business in currencies other than the U.S. dollar.  Additionally, substrate sales include precious metals pricing, which may be volatile.  Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue.  Excluding substrate sales removes this impact.  Tenneco uses this information to analyze the trend in revenues before these factors.  Tenneco believes investors find this information useful in understanding period to period comparisons in the company's revenues.

 

SOURCE Tenneco Inc.

Back